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Case Example 1

Management Control Systems

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University of Central California: Designing an Incentive System Kemp Johnson Sheila Schutz Emily Turek Andrew Young
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Introduction College athletics are essentially a service industry. This industry has become a big business. People pay to come and watch their favorite teams play. Ticket sales, booster donations, student enrollment, and merchandise sales are influenced by the performance of those teams. The coaches of college teams have become powerful managers of teams that have an impact on a multitude of areas. Providing compensation contracts to these coaches is a difficult proposition because of the competitive market for their services and the overall impact that they have on the university. Many times the coaches are the most compensated employees of a university. “The role of compensation is to provide individuals with rewards they value when their behavior promotes the organization’s objectives (Atkinson and Kaplan).” The universities objectives are to have successful athletic teams. They must come up with competitive contracts that motive their coaches towards these objectives realizing that coaches are going to do what is in their own best interest. The university cannot control the intrinsic rewards a coach receives from a job well done or building successful relationships. They can, however, control the amount of extrinsic rewards that a coach receives. The following case examines the compensation of different college coaches. Background University of Central California SeaDevils University of Central California is located in Santa Rosa, California. The school was founded in 1985 and the Athletic Department began with eight sports teams. The original eight were football, volleyball, men's and women's basketball, men's and women's track, 2
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men's golf, and women's swimming and diving. UCC plays in Division I and plays in the Western Athletic Conference (WAC). Over the Years The football team coach has been at UCC since the beginning; he has led the team to seven conference championships, twelve bowl games, and has an overall record of 156-96. Within the last five years the team's performance on the field has been outstanding, however, there has been a large decrease in the academic performance. The coach is currently at the end of a 5-year contract that had paid him $900,000 annually with minimal performance bonuses. Since the new Volleyball coach took over two years ago, the team has displayed great improvement. The new coach was a former All-American and has lead the team to a record of 17-14 this year and is 27-35 overall. Since the start of the program the Volleyball team has three conference championships and three NCAA tournament appearances. The coach is in the third year of a 5-year contract. He negotiated a contract that was heavily lading with performance incentives and a smaller base salary of $300,000 a year.
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Case Example 1 - University of Central California Designing...

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